Main Street Redefines Sustainability

As we approach midyear, 2010 is turning out to be both a good year and a bad year for the clean energy crowd. There is soul searching, consternation and inspiration taking place all at once around the world today as the global aspirations for the clean energy economy and a massive response to fears of climate change confront the realities of the great recession, climategate, looming deficits and dreaded inflation.

The world is emerging from the great recession taking stock of the impacts and dealing with the aftermath. In that context, the Pew Charitable Trusts released its report on the clean energy economy as a follow-up to the recent meeting of the G-20 leaders. You can find it here.[1]

Once you get past the political correctness, pandering and the “America is falling behind” spin because we did not pass cap and trade, sign off on COP15 or apologize enough for other sins, it isn’t a bad read.

I would highlight the following points from the report:

Global Clean Energy Economy is Growing. Clean energy investments in G-20 nations grew 230% from 2005 to 2009. Despite a retreat of 6.6% during the worst of the recession, there are $162 billion in continued investment in 2009 and it is expected to grow in 2010 by $200 billion.

USA led the world in renewable energy capacity at 53.4 GW, but Pew calls this falling behind the faster pace set by China, Germany, Spain and India. It conveniently fails to mention that China is tired of being beaten up for building fossil plants and its massive pollution, sees a huge export market for PV panels and wind turbines, and was vacuuming up the feed in tariff subsidies from Spain and Germany until the latter pulled the plug and cratered their own clean energy market growth which proved unsustainable without the subsidies.

China overtakes the US in installed renewable capacity in 2010 which Pew again spins as America falling behind. Instead America’s RPS policies, tax credits and renewable investment supports are bringing America to the brink of achieving the original 20% RPS goals in many states.

Wind is a mainstream resource in every market and solar is near mainstream as prices fall and installed capacity grows. America benefits from China driving down the price of wind turbines and PV panels to grid parity levels even if it does cause accelerated consolidation in the clean energy segment. China and the entire world benefit if expanding clean energy production in China grows its market share of renewable energy capacity—a win-win not a win-lose.

My biggest gripe with the Pew report is its pandering to the G-20 by denigrating the US. Look at page 13, for example, in the section entitled Renewable Capacity Growing Worldwide in which Pew states that the US led the world in installed capacity for wind, solar, geothermal and biomass but risks falling behind in market share growth as other countries pick up the pace. It then refers again to Spain and Germany as if they are models to emulate with their heavy, unsustainable subsidies that imploded in a FiT of economic unreality.

Celebrate Competitive Clean Energy Markets

From my vantage point, the US should celebrate the growth in clean energy investment and renewable energy market share in other countries around other world as validation that the US investment and leadership in making a market for clean energy, nurturing that market but forcing it to be economic and sustainable is a better model than the socialized approach used in Germany and Spain, for example.

So what does this rant have to do with Main Street you ask?

Read the recent story in the Sacramento Bee about how vineyards in Napa Valley and farmers in the great Central Valley of California are adapting to this clean energy economy. Deprived of enough water to grow their crops by court decisions, environmental restrictions and a disinterested (except in election years) Federal Government some are turning to harvesting energy from their land to stay in business.

Mark Glover’s story in the Bee May 1st is a case in point.[2] The Sutter Basin Growers Cooperative, made up of 125 Northern California rice and bean growers recently dedicated a five acre solar farm of 11,922 PV modules near Sacramento. The 864kw plant has been in service since March and powers rice and bean dryers during the co-op’s peak harvest season and the peak power season too from September to November and net meters its energy back to the utility grid when not being used by the farmers. It is part of a strategy to reduce the cost of operations. That it also helps the environment is good news, but the more important goal is to help the farmers survive. The project is expected to cut the farms’ energy costs 80 percent, or $226,615 the first year.

The $4.5 million project cost was defrayed by state and federal solar tax incentives and other utility credits. Sutter Basin Coop financed the project through a lease from the Farm Credit System, with an option to purchase it outright after 10 years. This project is one of about a dozen agriculture-related solar projects installed in the Central Valley in recent years, according to Glover’s story.

America’s Main Street clean energy story is about the bottom line

Germany and Spain bought market share by heavy subsidies and feed in tariffs that were not sustainable. China used those subsidies to undermine the German and Spanish policy by vacuuming up the subsidies to buy cheaper wind turbines and PV panels instead of the work going to German and Spanish companies as the government expected.

Yes, we have some of that here too. Remember Senator Schumer of New York wailing that the Federal Stimulus money for renewables was being used to buy cheaper Chinese turbines and panels? Schumer’s union friends demanded a “buy American” policy quid pro quo but that violates virtually every trade deal we have ever signed. China is growing market share largely because its command and control economy enables it to make decisions quickly and execute them for competitive advantage. This is useful but not always lasting.

When deals make sense at the bottom line instead of the political contributions line they are sustainable. And guess what else the Pew report failed to mention?

America is the hottest market in the world AGAIN for clean energy investment. Why? Because our markets are open, our business is transparent, corruption is low, the contracts are safe and enforceable, and the deals work because they are sanity checked every day, every quarter, every year at the bottom line by investors.